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You hit the nail on the head. I would say that it's not a foregone conclusion that the LW must move on, but she certainly has to realize that the daughter comes first, that she cannot love her boyfriend and not love all that is his life -- and the bulk and focus of his life now is or should be his daughter.
I also think the LW hasn't looked around much at the average 16 year old these days. They are very needy as a lot. Having been coddled by their parents in this latest generation's version of parenting, many are quite immature and unable to cope for themsleves. I listen to my friends talk about the level of involvement they have in the lives and decisions of their COLLEGE age kids even, and I marvel. So I'd say that the LW is out of touch with how the average child is raised these days and may not make a good stepmother.